Abu Dhabi office and residential rents continued to slide in Q3 as the impact of job losses and cost sensitivity hit the real estate sector, according to a new report.
Real estate consultancy CBRE said in its Q3 MarketView that secondary office rentals declined around 2 per cent during the quarter, translating into a 9 per cent decline from the same period last year.
However, it said the trend was “accentuated” by a development pipeline of inferior products and locations.
Grade A units remained more stable with an average price of Dhs1,850 per square metre, but there were signs that market pressures could soon have an impact, according to the firm.
“Landlords are now showing greater flexibility and a willingness to negotiate with major tenants, underlining a sustained shift towards becoming a tenant-friendly market,” said Mat Green, head of research and consulting UAE, CBRE Middle East.
In the residential market, average rental prices continued to decline due to the “weak employment market and softening economy”.
Average prices fell around 2 per cent quarter-on-quarter and 5 per cent year-on-year.
Among the hardest hit were luxury residences in master planned communities favoured by blue chip corporates and high-income expat residents, which saw rents drops by an average of 3 to 5 per cent.
For smaller units the impact was less pronounced with studio and one-bedroom units in mainland Abu Dhabi ranging between Dhs25,000 and Dhs45,000 per annum and Dhs35,000 and Dhs60,000 per annum respectively.
“This translates into a minimum 35 per cent gap in rentals as compared to rental levels for low to mid-end properties in the city centre, which range from Dhs40,000-Dhs72,000/unit/ annum for studios and Dhs55,000-Dhs120,000 /unit/ annum for one bedroom units,” CBRE said.
More affordable community housing products have demonstrated modest rental growth or remained flat, indicating a shift towards cost sensitivity, according to the firm.
Further migration of tenants to affordable locations like Al Reef Downtown and cheaper areas of the mainland is expected as a result.
Last month, property site Bayut.com said apartment rents in the UAE capital declined an average of 4 per cent during Q3